Lawyers exempt from HUD mortgage originator rule
Posted: 2:05 pm Wed, August 24, 2011
(Dolan Media Newswires) — The Department of Housing and Urban Development issued new final rules setting standards for compliance with the Secure and Fair Enforcement for Mortgage Licensing Act, including a rule that exempts lawyers from the definition of “mortgage originator” when they are providing legal services to their clients.
The SAFE Act was enacted to increase consumer protections and reduce fraud in mortgage lending. The Act created standards for licensing of mortgage loan originators and requires states to implement systems for licensing and registering them.
But under the new final rules, a “licensed attorney who only negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of a client” is not “engaging in the business of a loan originator [or] subject to licensing under the SAFE Act.
William Robinson, the president of the American Bar Association, praised the exemption as “not just a win for the already well-regulated legal profession, but also for their homeowner clients.”
“While the ABA wholeheartedly supports [the] timely and worthwhile goals [of the SAFE Act], HUD’s original proposed rule to implement the SAFE Act contained overly broad language that would have imposed excessive new federal regulations on lawyers engaged in the practice of law,” Robinson said in a statement.